Maternal alcohol consumption causes Fetal Alcohol Spectrum Defects (FASD), an array of developmental abnormalities that includes neurological, craniofacial, cardiac and limb malformations, as well as mental and growth retardation. FASD is enormously detrimental to afflicted individuals, to their families, and to society as a whole. Although there has been great progress in delineating mechanisms contributing to alcohol-induced birth defects, there are still many gaps that need filling. We have evidence that a post-translational modification defect may be at the root of FASD, namely, ethanol-impairment of cholesterol esterification of a potent fetal morphogen, Sonic hedgehog (Shh). Shh is a cholesterol-modified protein that is produced in different regions of developing embryos at various stages of embryogenesis. It regulates cell differentiation and proliferation of neural, cardiac, bone, blood, and endodermal progenitors in early embryonic development. Knocking-down Hedgehog (Hh) signaling pathway components causes a spectrum of developmental defects that resemble those that occur in FASD. We note dose-dependent reductions in cholesterol esters, cholesterol-modified Shh, and Hh pathway activity in zebrafish embryos that develop FASD following transient alcohol exposure. These findings prompted our HYPOTHESIS that ethanol-inhibition of Shh ligand modification by cholesterol, and the consequent decreases in Hh pathway activity during embryogenesis, contribute to FASD pathogenesis. We will evaluate this hypothesis by two aims: (1) To characterize the effects of ethanol on Hh signaling and the resulting pattern of morphological defects throughout embryogenesis. (2) To determine whether inhibited cholesterol modification of Shh is responsible for ethanol-induced developmental defects. The results from this investigation may provide insight into a novel mechanism for alcohol's teratogenic effects and lead to new directions for the prevention, diagnosis and treatment of Fetal Alcohol Spectrum Defects.